Annual Report. For the twelve month period ended 31 December Regulated information

Transcription

1 Annual Report For the twelve month period ended 31 December 2012 Regulated information Brussels April 23,

2 ANNUAL REPORT 2012 Contents 1. AUDITED CONSOLIDATED FINANCIAL STATEMENTS Statement of responsibility Audited consolidated financial statements Audited consolidated statement of comprehensive income for the years ended 31 December 2012, 31 December 2011 and 31 December Audited consolidated statement of financial position for the years ended 31 December 2012, 31 December 2011 and 31 December Audited consolidated statement of cash flows for the years ended 31 December 2012, 31 December 2011 and 31 December Audited consolidated statements of changes in equity for the years ended 31 December 2012, 31 December 2011 and 31 December Notes to the audited consolidated financial statements General information Statement of Compliance Foreign currency Basis of consolidation Use of estimates of judgements Significant accounting policies Intangible assets Property, plant and equipment Leases Government grants Inventories Other and trade receivables Cash and cash equivalents Equity Minority interests Provisions Interest-bearing borrowings Trade and other payables

3 Derivative financial instruments Impairment Reversals of impairment Revenues Employee benefit obligations Financing costs Income taxes Segment reporting Events after the balance sheet date Key sources of estimation uncertainty Supporting notes to the consolidated financial statements Sales Other operating income Cost of sales Other operating expenses Impairment Financial income and costs Taxation Intangible assets Land and buildings Installations, machinery and equipment Furniture and vehicles Leasing and similar rights Other tangible assets Assets under construction Goodwill Deferred tax assets and liabilities Other non current assets Inventories Trade and other receivables Cash and cash equivalents Share capital Interest-bearing loans and borrowings Trade and other payables

4 Financial instruments Provisions Personnel Commitments Related parties Major subsequent events Earnings per share STATUTORY AUDITOR S REPORT TO THE GENERAL MEETING OF SHAREHOLDERS OF 4ENERGY INVEST NV, BOULEVARD PAEPSEM 20, 1070 ANDERLECHT, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (RPR BRUSSEL VAT BE ) REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS DISCLAIMER OF OPINION REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS REPORT OF THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2012 IN ACCORDANCE WITH ARTICLE 119 OF THE BELGIAN COMPANY CODE Overview of activities during the year Risks and uncertainties Comments on the consolidated financial statements Outlook for the year Important events which occurred after the end of the financial year Information regarding the circumstances that could significantly affect the development of the Group Information regarding research and development activities Use of financial instruments by the company in the framework of the company s risk management Information provided in accordance with article 34 of the Royal Decree dated 14 November Justification of the independence and expertise in accounting and auditing of at least one member of the audit committee (Article 119, 6 of the Belgian Company Code) STATUTORY AUDITOR S REPORT TO THE GENERAL MEETING OF SHAREHOLDERS OF 4ENERGY INVEST NV, BOULEVARD PAEPSEM 20, 1070 ANDERLECHT, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (RPR BRUSSEL VAT BE ) REPORT ON THE FINANCIAL STATEMENTS DISCLAIMER OF OPINION REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

5 5. REPORT OF THE BOARD OF DIRECTORS ON THE STATUTORY STATEMENTS FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2012 IN ACCORDANCE WITH ARTICLE 96 OF THE BELGIAN COMPANY CODE Abbreviated statutory financial statements for the accounting years ended 31 December 2012 and 31 December Statutory capital of 4Energy Invest NV Summary of significant statutory accounting policies of 4Energy Invest NV Basic Principles Special accounting rules Incorporation expenses Intangible assets Property, plant and equipment Non-current financial assets and non-current receivables Amounts receivable within one year Cash investments Cash and cash equivalents Provisions for risks and expenses Payables becoming due later than one year and not later than one year Accruals and deferrals of the assets and liabilities Company facts and activities Cogeneration Pellet production Comments on the statutory financial statements Statutory balance sheet Commitments towards the banks in the framework of the 4HamCogen project Commitments towards LRM in the framework of the 4HamCogen project Statutory profit & loss account Risk management and management of uncertainties Important events which occurred after the end of the fiscal year Information regarding research and development activities Information regarding the existence of company s branch offices Information regarding the circumstances having a potential major influence on the company s development Use of financial instruments by the company in the framework of the company s risk management Justification of valuation rules (art 96, 6 of the Belgian Company Code)

6 5.13 Information provided in accordance with article 523 of the Belgian Company Code Information provided in accordance with article 34 of the Royal Decree dated 14 November Justification of the independence and expertise in accounting and auditing of at least one member of the audit committee (Article 96, 9 of the Belgian Company Code) Corporate Governance Statement (art 96 2 Belgian Company Code) Reference Code Board of directors Committees within the board of directors Audit committee Nomination and remuneration committee Advisory committee Evaluation process Remuneration report Procedure for (i) developing a remuneration policy for non-executive directors and executive directors and (ii) setting the level of remuneration for nonexecutive directors and executive directors Remuneration and benefits granted to directors Incentives granted in shares, options or otherwise Severance pay Internal control and risk management systems in relation to the financial reporting Conflicts of interest and related parties Approval of accounts and discharge SPECIAL REPORT OF THE BOARD OF DIRECTORS TO THE SHAREHOLDERS IN ACCORDANCE WITH ARTICLE 633 OF THE BELGIAN COMPANY CODE SPECIAL REPORT OF THE BOARD OF DIRECTORS TO THE SHAREHOLDERS ON AUTHORIZED CAPITAL IN ACCORDANCE WITH ARTICLE 604 OF THE BELGIAN COMPANY CODE

7 1. AUDITED CONSOLIDATED FINANCIAL STATEMENTS Statement of responsibility The undersigned Filip Lesaffer, Executive Chairman, and Nathalie De Ceulaer, Chief Financial Officer ad interim, declare that, to the best of their knowledge: - the consolidated and statutory financial statements for the year ended December 31, 2012 prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit and loss of 4Energy Invest and the entities included in the consolidation, and - the consolidated and statutory board reports include a fair review of the development and performance of the business and the position of 4Energy Invest and the undertakings included in the consolidation, together with a description of the principal risks and uncertainties they face. 1 All amounts in this section refer to IFRS consolidated figures. 7

8 1.2 Audited consolidated financial statements Audited consolidated statement of comprehensive income for the years ended 31 December 2012, 31 December 2011 and 31 December 2010 (1) Result of the period excl. impact IRS: this is the result corrected for the impact of the adjustment of the fair value of the interest rate swaps of the Group. The fair value adjustment has a negative impact on the result of 673 k EUR. For more information, refer to section and

9 (2) Result of the period excl. impact IRS/warrant: this is the result corrected for the impact of the adjustment of the fair value of the interest rate swaps of the Group and the cost of the warrants issued, which is expensed on a straight-line basis over the duration of the vesting period. This has a negative impact on the result of 14 k EUR. For more information, refer to section Result of the period -37,392-4,249-1,095 Other comprehensive income: Income related to issued warrants Income tax relating to components of other comprehensive income Other comprehensive income for the year, net of tax Total comprehensive income for the year -37,377-4,

10 1.2.2 Audited consolidated statement of financial position for the years ended 31 December 2012, 31 December 2011 and 31 December 2010 Assets Notes Non current assets 50,362 83,086 69,000 Intangible fixed assets Land and buildings ,463 4,847 2,919 Installations, machinery and equipment ,834 59,766 27,802 Furniture and vehicles Leasing and similar rights , Other tangible assets Assets under construction ,679 31,797 Goodwill Deferred tax assets ,697 5,491 Other non current assets Current assets 6,160 6,217 4,797 Inventories ,014 1,021 Trade receivables ,417 3,394 1,242 Other receivables ,099 1,515 Cash and cash equivalents , ,019 Total 56,522 89,303 73,797 Equity and liabilities Equity -14,869 22,509 Share capital ,387 6,387 6,387 Share premium 18,104 18,104 18,104 Retained earnings -39,360-1,982 2,182 Equity attributable to equity holders -14,869 22,509 26,673 Minority interests Total equity -14,869 22,509 26,673 Non current liabilities 28,504 54,333 Interest bearing loans and borrowings ,265 54,333 37,843 Deferred tax liability Provisions Current liabilities 42,887 12,462 Interest bearing loans and borrowings ,318 5,718 4,610 Trade payables ,961 3,563 3,070 Other payables ,609 3,181 1,600 Total 56,522 89,303 73,796 10

11 The balance sheet amounts have been adjusted, compared to the communication on annual results of March 29, 2013: this is due to the reclassification of the installations in leasing. Current Reported Difference 29/3/2013 Installations, machinery and equipment 40,834 44,000-3,166 Leasing and similar rights 5,038 1,873 3,166 45,872 45,

12 1.2.3 Audited consolidated statement of cash flows for the years ended 31 December 2012, 31 December 2011 and 31 December vs vs vs Cash flow from operating activities Net profit (loss) after taxes -37,392-4,249-1,095 Adjustments for non-cash or non operating items: Deferred taxes 6,697-1,205-2,134 Depreciation, amortization and provisions 6,211 3,371 3,108 Impairment of property, plant & equipment 24,184 3,471 1,774 Share options Unrealised loss/(gain) on financial instruments 673 1, Financial result 3,645 1,632 1,079 Cash flow from operating activities before 4,032 4,261 3,478 changes in working capital and provisions Decrease/(increase) in other non current assets ,564 Decrease/(increase) in inventories Decrease/(increase) in trade receivables -23-2,152 1,487 Decrease/(increase) in other receivables Increase/(decrease) in trade payables Increase/(decrease) in other payables Net cash from operating activities 3,804 3,230 6,490 Cash flow from investing activities Net investment property, plant & equipment -3,754-19,505-17,514 Net investment financial assets Net cash from investing activities -3,754-19,505-17,514 Cash flow from financing activities Issue share capital Transaction costs attr. issue share capital Proceeds from loans 6,589 17,598 9,951 Loan reimbursements -2,056 Interest income Interest cost -3,653-1,639-1,079 Net cash from financing activities ,965 8,872 Net cash mutation ,152 Begin 710 1,019 3,171 End 1, ,019 Mutation ,152 12

13 1.2.4 Audited consolidated statements of changes in equity for the years ended 31 December 2012, 31 December 2011 and 31 December vs vs vs Capital At beginning of the period 24,491 24,491 24,491 Share capital increase Share capital decrease Costs attributable to capital Deferred taxes At the end of the period 24,491 24,491 24,491 Retained earnings At beginning of the period -1,982 2,182 3,058 Profit (loss) of the year -37,392-4,249-1,095 Equity related to share options At the end of the period -39,360-1,982 2,182 Total equity attributable to equity holders -14,869 22,509 26,673 Minority interest At beginning of the period Increase minority share Profit (loss) of the year Buy out minority shareholders At the end of the period Total equity -14,869 22,509 26,673 13

14 1.2.5 Notes to the audited consolidated financial statements General information 4Energy Invest is a limited liability company (naamloze vennootschap/société anonyme) ( The Company ) and was incorporated under Belgian law on September 28, 2005 for an indefinite period of time with it s registered office located at Paepsemlaan 20, 1070 Brussels and it is registered with the Belgian register for legal persons (rechtspersonenregister/registre des personnes morales) under the number (Brussels). The Company and its subsidiaries ( The Group or 4Energy Invest ) form a Belgian renewable energy group that was set up with a view to create and manage a portfolio of small to midsized locally embedded projects that valorize biomass, directly or indirectly into energy. Prior to the establishment of the Company, the Founders Yves Crits, Guido Schockaert and Nico Terry, were active in the biomass industry through Renogen SA, a limited liability company (naamloze vennootschap/société anonyme). In November 2005, the shares of Renogen SA, which were owned for 100% by the Founders were contributed into the share capital of 4Energy Invest. Between September 2005 and November 2005, the Company and Renogen have been working under common control of the Founders. In June 2006, the limited liability company Amel Bio (naamloze vennootschap/société anonyme) has been established, a purchasing company that has been owned for 72,6% by Renogen since its incorporation. On December 19, 2008, Renogen acquired the shares of Amel Bio owned by Belwood Amel, BVG Niessen and Clean Box (Delhez Bois) for an amount of 17 K EUR (paid in cash). As a result, the Group now owns 100% of the shares of Amel Bio. In August 2006, the Company founded the limited liability company 4BioFuels. 4BioFuels is a 100% owned company that had been set up for a specific bioethanol related project in the port of Brussels which is currently no longer under development. It has been decided to develop from within 4BioFuels wood biomass torrifaction activities. This development has now been stopped. 4BioFuels is now a dormant entity. 4Energy Invest (through its fully owned subsidiary Renogen) acquired 100% of the shares of Pontrilas Renewable Energy Limited, in 2 phases. This entity was set up as a joint venture with Pontrilas Group Limited, with the objective of setting up a cogeneration project in Pontrilas, United Kingdom. This project has now been abandoned. Pontrilas Renewable Energy has renamed 4EI Limited, and is in liquidation. There are no more outstanding costs or liabilities. Since June 17, 2008, the 4Energy Invest shares are unconditionally listed on Euronext Brussel. Pursuant to its Initial Public Offering, 4Energy Invest has issued new shares with VVPR strips, which corresponded to gross proceeds for the Company of 22 million EUR. After the Initial Public Offering, the total amount of shares of 4Energy Invest outstanding is In October 2009, the Company founded the limited liability company 4HamCogen. 4HamCogen is a 100% owned subsidiary that has been set up to construct and operate the wood biomass cogeneration project in Ham, Flanders, Belgium. The Group currently operates the following installations and legal entities: 14

15 Amel I cogeneration project ( Amel I ): in operation since November 2007 (operated within the affiliates Renogen/Amel Bio); Amel II cogeneration project ( Amel II ): in operation since May 2008 (operated within the affiliates Renogen/Amel Bio); Amel III white wood pellets production project ( Amel III ): in operation as from the first semester of 2012 (operated within the affiliates Renogen/Amel Bio) (this is the former BioCoal facility, that was converted); Ham cogeneration project ( Ham ): in pre-commercial operation as from November 2011, in commercial operation as from April 2012 (operated within the affiliate 4HamCogen). The consolidated financial statements were approved by the Board of Directors of 4Energy Invest on April 19 th Statement of Compliance The consolidated financial statements of The Group are prepared in accordance with the requirements of International Financial Reporting Standards (IFRS) as adopted by the EU, as issued by the International Accounting Standards Board (IASB) and interpretations issued by the International Financial Interpretations Committee of the IASB. The consolidated financial statements are prepared on a historic cost basis, with the exception of the financial derivatives which are stated at fair value. All figures are in thousands of Euros ( 000), unless stated otherwise. Minor rounding differences might occur. The Group adopted the amended versions of IFRS that are effective for accounting periods beginning on January 1, No significant amendments were made to IFRS in 2012 which would affect the presentation and disclosures of the 2012 financial reporting statements Foreign currency The Group s presentation currency is the Euro. In the past, the Group had limited foreign operations through its development activities in Brazil and the United Kingdom. These have been terminated, and exposure to foreign currency risk is reduced to almost zero. Foreign currency transactions are recognized initially at exchange rates prevailing at the date of the transactions. Subsequently to closing, monetary assets and liabilities denominated in foreign currencies are translated at the balance sheet currency rate. Gains and losses resulting from the settlement of foreign currency transactions, and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. When a gain or loss on a non-monetary item is recognized directly in equity, any exchange component of that gain or loss will be recognized directly in equity. Conversely, when a gain or loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss will be recognized in profit or loss. Financial statements of foreign entities are translated as follows: - assets and liabilities are translated at the closing exchange rate of the European Central Bank: 15

16 - income and expenses are translated at the weighted average exchange rate for the year; - shareholders equity is translated at historical exchange rates. Exchange differences arising from the translation of the net investment in foreign entities at the closing exchange rates are included in shareholders equity. On disposal of foreign entities, cumulative translation adjustments are recognized in the income statement as part of the gain or loss on the sale Basis of consolidation Subsidiaries are entities over which The Company exercises control, which generally means that The Company holds, directly or indirectly more than 50% of the voting rights attached to the entity s share capital and is able to govern its financial and operating policies so as to obtain benefits from its activities. As described under section General information, between September 2005 and November 2005, 4 Energy Invest and Renogen have been working under common control of the Founders. As a result, IFRS 3 Business Combinations has not been applied on the contribution in kind of the shares of Renogen into the share capital of 4Energy Invest which implies that the contribution in kind had no effect on the consolidated equity of The Group. When accounting for business combinations, IFRS 3 will be applied. The acquiree s identifiable assets and liabilities that meet the conditions for recognition under IFRS 3 are recognized at their fair value at the date of acquisition, except for non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations. Which are valued at fair value less cost to sell. The financial statements of subsidiaries are included in the consolidated financial statements from the date when the Group acquires control until the date when control is relinquished. Intra-group balances and any gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment. Equity and net result attributable to minority shareholders are shown separately in the balance sheet and income statement respectively. The following companies are included in the consolidation: - 4Energy Invest NV Boulevard Paepsem Anderlecht RPR Brussel BE Renogen SA 16

17 Holzstrasse Amblève RPR Eupen BE Amel Bio SA Holzstrasse Amblève RPR Eupen BE BioFuels SA Boulevard Paepsem Anderlecht RPR Brussel BE HamCogen De Snep Ham RPR Brussel BE Use of estimates of judgements The preparation of consolidated financial statements in compliance with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both the current and future periods. 17

18 1.2.6 Significant accounting policies Intangible assets Intangible assets are initially measured at cost. Intangible assets are recognized if it is probable that the future economic benefits which are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably in accordance with IAS 38. After initial recognition, intangible assets are measured at cost or fair value less accumulated amortization and any accumulated impairment losses. Intangible assets are amortized on a straight-line basis over the best estimate of their useful lives Property, plant and equipment An item of property, plant and equipment is recognized as an asset if it is probable that future economic benefits associated with the item will flow to The Group and its cost can be measured reliably. This recognition principle is applied to the costs incurred initially to acquire an item of property, plant and equipment but also to costs incurred subsequently to add to, replace part of, or service it. The cost of self-constructed assets includes any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Examples of directly attributable costs are: - costs of site preparation; - installation and assembly costs; - professional and management fees; - all risk worksite insurance; - borrowing costs (in accordance with IAS 23) The recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in a manner intended by management. In principle, the recognition of costs incurred ceases upon the signing of the Take-over certificate with the main contractors. The construction cost might include some intangible fixed assets. However, as the intangible component has been insignificant in previous years in the total capital expenditure, both tangible and intangible assets were included under property plant and equipment. From 2008 on, intangible assets are presented separately in the balance sheet. Spare parts are usually carried at inventory and recognized in profit and loss as consumed. Borrowing costs are expensed as incurred, except to the extent that they are capitalized. Borrowing costs incurred for the construction of any qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. An item of property, plant and equipment is stated at historical cost less depreciation. 18

19 Depreciation is charged to the consolidated income statement on a linear basis over the estimated useful lifetime of an item of property, plant and equipment. Land is not depreciated. Useful lifetimes and depreciation method are reviewed annually. The estimated useful lifetimes are as follows: Asset category Building 14 years 14 years 14 years Installations, machinery & equipment 5-15 years 5-15 years 5-15 years Office equipment & furniture 3-5 years 3-5 years 3-5 years Motor vehicles 5 years 5 years 5 years The estimated useful lifetime of the Amel I installation was set at 14 years. The estimated useful lifetime of the Amel II installation was set at 15 years. The estimated useful lifetime of the HamCogeneration installation has been set at 15 years. The estimated useful lifetime of the Amel III installation was set at 15 years Leases Leases under which The Group assumes substantially all the risks and rewards of ownership are classified as finance leases. Items of property, plant and equipment acquired by way of finance lease are stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation and impairment losses. The depreciation policy for leased assets is consistent with that for depreciable assets which are owned. Leases under which a substantial part of the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases. All payments or receipts under operating leases are recognized as an operating expense respectively income in the statement of comprehensive income using the straight-line method. (Schedule of obligations under operating lease agreements) Government grants Government grants are not recognized until there is reasonable assurance that The Group will comply with the conditions attached to them and that the grants will be received. Grants related to assets shall be presented in the statement of financial position by deducting the amount of the grant in arriving at the carrying amount of the asset. In the course of 2009, The Group was granted 1,263 k EUR of grants related to the Amel III capital expenditure program. This amount has been fully deducted of the carrying value of the Amel III installation. Half of this amount has been received, the other half was to be received in 2012 or At this moment, it is more likely than not that the second half of the subsidy will be received, due to time constraints. Therefore it has been reversed for 632 k EUR. Green certificates in Wallonia and Flanders qualify as grants related to income in accordance with IAS 20 as they are being attributed by the CWaPE (Walloon government institution) and the VREG (Flanders Government Institution) as support for the production of green energy. The green certificates are allocated per quarter (in Wallonia)/ per month (in Flanders) based on 19

20 parameters relating to the quarterly/monthly production. In accordance with IAS and IAS 20.23, grants to income, received in return for compliance with certain conditions relating to the operating activities of the entity, are deducted in reporting the related expense (production cost being part of COGS) and are valued at fair value. Taking into account the prescribed formulae of the CWaPE and the VREG and the objective parameters derived from the operating systems of The Group, there are no unfulfilled conditions and other contingencies attached to the green certificates. For 2012, the fair value of the green certificates received from the CWaPE and the VREG amounted to 13,732 k EUR versus 8,668 k EUR in 2011 and 7,763 k EUR in The increase is explained by the Ham-operation that was operational for its first full year in Inventories Inventories are valued at the lower of cost and net realizable value. Cost is determined by the first-in, first-out (FIFO) method and comprises all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Due to the termination of the Operations and Maintenance contract for the cogeneration units Amel I and Amel II, all maintenance activities are done in house and spare parts are being classified as inventory as from 2009 onwards (see above). Other items held in inventory are biomass and pellets ready for sale. With reference to Government grants related to income, green certificates held for sale qualify as Inventory as defined by IAS 2. No grants were in stock at 31/12/ Other and trade receivables Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated non-recoverable amounts Cash and cash equivalents Cash includes cash in hand and cash with banks. Cash equivalents are short term highly liquid investments that are easily convertible into known amounts of cash, have maturity dates of 3 months or less and are subject to an insignificant risk of change in value. Bank overdrafts that are repayable on demand and form an integral part of the Group s cash management are included as a component of cash and cash equivalents for the purpose of the consolidated cash-flow statement Equity In accordance with IAS 32, incremental costs directly attributable to the issue of new shares or options are recognized in equity as a deduction, net of tax, from the proceeds Minority interests Minority interests represent the shares of minority shareholders in the equity of subsidiaries which are not fully owned by the Group. 20

21 Provisions A provision is recognized in the consolidated statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and, where appropriate, the risks specific to the liability Interest-bearing borrowings Interest-bearing borrowings are recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost with any difference between cost and redemption value being recognized in the consolidated statement of comprehensive income over the period of the borrowings on an effective interest basis. The Group classifies as a current portion any part of long-term loans that is due to be settled within one year from the date of the statement of financial position. At the date of the preparation of the consolidated financial statements, the nominal value of loans is increased by unpaid interest Trade and other payables Trade and other payables are stated at their nominal value Derivative financial instruments A derivative is a financial instrument or other contract which fulfills the following conditions: (a) (b) (c) its value changes in response to the change in a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract; it requires no initial net investment or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors; and it is settled at a future date. Hedging derivatives are defined as derivatives that comply with the company s risk management strategy, the hedging relationship is formally documented and the hedge is effective, that is, at inception and throughout the period, changes in the fair value or cash flows of the hedged and hedging items are almost fully offset and the results are within a range of 80 % to 125 %. The Group holds currently no hedging derivatives. Derivative financial instruments that are not designated as hedging instruments are classified as held-for-trading and carried at fair value, with changes in fair value included in net profit or loss of the period in which they arise. 21

22 Fair values are obtained from quoted market prices or discounted cash-flow models, as appropriate. All non-hedge derivatives are carried as current assets when their fair value is positive and as current liabilities when their fair value is negative Impairment The carrying amounts of The Group s assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset s recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. Impairment losses are recognized in the consolidated statement of comprehensive income. An asset s cash-generating unit is the smallest group of assets that includes the asset and generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Identification of an asset s cash generating unit involves judgment. Impairment losses recognized in respect of cash-generating units reduce the carrying amount of the assets in the unit (group of units) on a pro-rata basis. Impairment losses of receivables are determined based on an analysis of the credit status of customers and the period for which the receivable has been overdue Reversals of impairment An impairment loss is reversed in the consolidated statement of comprehensive income if there has been a change in the estimates used to determine the recoverable amount to the extent it reverses an impairment loss of the same asset that was recognized previously as an expense Revenues Revenue is recognized when it is probable that the economic benefits associated with a transaction will flow to the entity and the amount of the revenue can be measured reliably. Sales are recognized net of sales taxes and discounts. Revenue from the sale of goods is recognized when delivery takes place and the transfer of risks and rewards is completed. (i) Sale of Green Certificates Upon sale, the income from the sale of green certificates is, in line with IAS 18 presented as Sale of green certificates. Accordingly, the related green certificates, included in inventory (see ) are charged to the production cost being part of cost of sales. In certain circumstances, it is necessary to apply the recognition criteria to the separately identifiable components of a single transaction in order to reflect the substance of the transaction. When this applies, the group will apply the relative fair value method allocating the revenue to the two components based on the ratio of the fair value of each single component individually over the total fair value of the transaction. 22

23 (ii) Sale of CO2 Certificates and certificates of Garantie van Oorsprong Under the Belgian National Allocation Plan for the allocation of greenhouse gas emission allowances in accordance with Directive 2003/87/EC of the European Parliament and the Council (EU Emission Trading Scheme), the cogeneration plants Amel I and Amel II are granted yearly GHG emission rights for free. As there are no specific rules under IFRS dealing with the accounting treatment of GHG emission allowances, the Company decided to apply the following principle: - emission rights are classified as inventories, if not sold at balance sheet date; - sold emission rights are recorded at market value. (iii) Sale of electricity Electricity is invoiced monthly based on the readings of the metering system installed at the injection points to the electricity network. The meter readings are carried out independently by the distribution grid manager. (iv) Sale of heat Heat consumed by the industrial customers in Amel is invoiced monthly based on an objective metering system installed. Under the current contractual arrangements, heat is only valorized marginally. However, given the specific multiplication impact of heat consumption on the number of green certificates produced, the contractual arrangements with the heat consumers in Amel do not qualify as onerous contracts. An onerous contract is considered to exist where the Group has a contract under which the unavoidable cost of meeting the obligations under the contract exceed the economic benefits expected to be received under it. (v) Sale of pellets White wood pellets produced in the Amel 3 installation are sold in bulk or in bags at market prices Employee benefit obligations The Group did not enter into any defined-benefit or defined-contribution plans. The Group issued equity-settled share based payments to certain employees, service providers, management members and directors of The Group. Equity-settled share-based payments are recognized at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share based payments is expensed, with a corresponding increase in equity, on a straight-line basis over the vesting period, based on the Group s estimate of the stock options that will eventually vest and adjusted for the effect of non-market-based vesting conditions Financing costs Financing costs comprise interest payable on borrowings calculated using the effective interest rate method net of interest capitalized, interest receivable on funds invested, foreign exchange gains and losses that are recognized in the statement of comprehensive income. 23

24 Income taxes Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognized in the consolidated statement of comprehensive income except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the date of statement of financial position, and any adjustment to tax payable in respect of previous years. Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date. A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax assets and liabilities are offset, if and only if has a legally enforceable right to set off current tax assets against current tax liabilities; and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity, or different taxable entities which intend either to settle current tax liabilities and assets on a net basis or to realize the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered Segment reporting Two operating segments have been identified: Cogeneration and Pellet production. In 2011 BioCoal projects were also reported as a separate operating segment, next to Cogeneration. As BioCoal project development has been aborted, and the installations have been turned into a white wood pellet production facility, the Pellet production substitutes the BioCoal segment. - Cogeneration is the process of simultaneously producing heat and electricity whereby heat is taken off by industrial partners that are intensive energy users thereof in their industrial activities and electricity is sold to energy suppliers by feeding it directly into the distribution grid. 4Energy Invest thereby sells the created green certificates to energy suppliers. - White wood pellet production is based on wood and can be used as renewable fuel for multipurpose commercial, industrial and domestic use. White wood pellet production differs from BioCoal pellet production in that the technological process is less complex (no torrefaction) and the pellets produced have a lower energy contents. 24

25 Cogeneration Pellets non segment related Total consolidated '000 '000 '000 '000 Revenues from external customers 18,419 1, ,586 Intersegment revenues/expenses Interest expense -3, ,326 Interest revenu Depreciation and amortisation -5, ,450 Impairment of assets -17,652-6, ,184 Reportable segment profit -22,436-7,201-7,754-37,392 Reportable segment assets 45,904 4, ,362 Reportable segment liabilities 53,146 9,630 1,806 64,582 Cogeneration Pellets Non segment related Total consolidated '000 '000 '000 '000 Third party revenue 18,419 1, ,586 Intersegment revenu Third party cost of sales -10, ,316 Intersegment costs Other operating expenses ,734 Net financial cost -3, ,318 Personnel cost -1, ,279 Depreciation -5, ,450 Impairment -17,652-6, ,184 Income tax expense 0 0-6,697-6,697 Total -22,436-7,201-7,754-37,392 The cogeneration segment sales relate to 2 major customers : Cogeneration Pellets Non segment related '000 '000 '000 Sales to SPE 9, Sales to E.ON BELGIUM 8, Events after the balance sheet date Up to the date of their approval, the figures in the consolidated financial statements were adjusted to reflect events that influenced the circumstances as they existed at the dates of financial position (adjusting events). Events influencing such circumstances arising after the dates of financial position are disclosed if they are of a material nature Key sources of estimation uncertainty All projects are currently in operation. Therefore The Group does not face any uncertainties anymore that are related to new project development. Other uncertainties remain, implicit to the sector The Group is active in, mainly: - Evolution of the electricity markets, mainly with respect to the sales price, that is defined by the markets; - Evolution of the regulatory framework and markets with respect to renewable energy, green certificates and cogeneration. 25

26 The Group also faces a financing risk: its financial partners have granted 4Energy Invest a standstill on all loan reimbursements until August The outcome of the ongoing discussions on debt restructuring with the financial partners of 4EnergyInvest will have a major impact on the viability of the group. If no satisfactory solution can be agreed upon by the end of the standstill period continuity is at stake. This report is prepared under the assumption of continuity. Discontinuity would imply additional impairments and provisions to be recorded. 26

27 1.2.7 Supporting notes to the consolidated financial statements The start of the Ham cogeneration project exploitation (end 2011) and of the Amel II pellet production facility (beginning of 2012) has a major impact on all aspects of the consolidated income statement Sales '000 '000 '000 Sale of green certificates* 13,732 8,668 7,005 Sale of CO2 certificates Sale of electricity production 4,372 2,916 2,320 Sale of heat production Sale of white wood pellets Other Total 18,836 11,764 9,545 *Sale of green certificates includes sale of certificates "garantie van oorsprong" for 28k EUR in 2010, 29k EUR in 2011 and 32k in 2012 The start of the Ham cogeneration project exploitation has a major impact on all aspects of the consolidated income statement. Turnover of the existing projects (Amel 1 and Amel 2) decreased, due to a 5% decrease in the electricity sales price and a 12% decrease in output quantity, caused by a three yearly scheduled major overhaul and by some unexpected outages. But this was compensated by the revenues generated by the Ham site, amounting to 8 mio euro. (i) Sale of Green Certificates The sale of green certificates in Amel is contracted under a 10-year off-take agreement with SPE at fixed prices. The sale of green certificates in Ham is contracted under an agreement with EON at prices related to VREG prices. The contract runs until October 2013, when it can be extended or stopped. Would the resulting price fall below the guaranteed price, than the company can sell the green certificates to the distribution network operator at the guaranteed price. (ii) Sale of CO2 Certificates and certificates of Garantie van Oorsprong CO2 certificates and certificates of Garantie van Oorsprong are sold on a spot basis. (iii) Sale of electricity The sale of all produced electricity in Amel is contracted under a 10-year off-take agreement with SPE at prices related to spot market electricity prices. 27

28 The sale of all produced electricity in Ham is contracted under an off-take agreement with EON at prices related to spot market electricity prices. The contract runs until October 2013, when it can be extended or stopped. (iv) Sale of heat Heat generated by the Amel cogeneration sites is currently used by third parties and by the Amel 3 installation. The supply of heat in Amel is contracted under medium term agreements with Belwood Amel and Delhez Bois. The productive use of the heat (that is a by-product of the generation of electricity) creates additional green certificates. Therefore no compensation is currently requested for the use of heat. (v) Sale of pellets Pellets are sold at market prices, both in bulk and in bags. No long term contracts are in place. Until now the full production could easily be sold. As The Group is new to this market (Amel 3 has now been active for one year), management is examining the optimal go-to-market strategy for this product Other operating income '000 '000 '000 Proceeds from liquidated damages for: - delay received from contractors temporarily shut down Recuperated costs termination project Insurance premiums Services provided Reversal management bonus Other Total 750 1,262 1,441 Other operating income consists of 0.2 million delay damages due by the main contractor for the Ham project, of 0.2 million received as insurance compensation for damages to the Amel 3 installation. Since no strategic alliance was formed with respect to BioCoal, executive management renounced the bonuses granted in this respect in 2009 and 2010, for a total of 0.3 million. 28

29 Cost of sales '000 '000 '000 Purchase biomass -7,421-4,208-3,682 Repair and maintenance -1,589-1, Other -2, Total -11,316-6,352-5,028 The cost of sales has risen significantly this is due to the addition of the Ham operations, and to a smaller extent also to an increase of costs in Amel. Biomass makes out the major part of the cost of sales. The further increase in purchases of biomass resulted from the Ham project (as of the 4 th quarter of 2011) and Amel 3 (as of first half of 2012). Repair and maintenance expenses increased significantly, mainly as a result of the maintenance cost related to the Ham facility and of the decreasing quality of the biomass. Other expenses show a similar increase, and relate mainly to consumables like water and sand (for the Ham installation), and the processing of ashes Other operating expenses '000 '000 '000 Consultancy fees (lawyers, management, -1,001-1,060-1,115 directors and other) Insurance Rent and rental charges Loss on disposal of fixed assets Other administrative expenses Total -1,734-1,525-1,900 Other operating expenses do not show the same increase, as the cost structure of the Group is under revision. A decrease is to be expected in

30 For 2012 VGD Bedrijfsrevisoren CVBA received as statutory auditor of the 4Energy Invest Group the following fees: in K EUR 4EI NV 4EI Group Fixed audit fee Other attestation missions 1 2 Other missions external to audit 0 5 Other missions carried out by entities related to VGD Bedrijfsrevisoren CVBA 2 3 Obligations under rental agreements On October 13, 2008, 4Energy Invest signed a contract for five years with Canon Belgium NV for the rental of a copier. The monthly rent is set at EUR. In the course of 2008, Renogen signed a rental agreement with Cofinimmo for the rent of office space and parking lots in the building Paepsem Business Park, Boulevard Paepsem 20, 1070 Anderlecht. The annual rent is set at 44k EUR and the agreement started on October 1, 2008 for nine years with end date of September 30, The annual rent of the offices for the period until July 31, 2009 was exceptionally reduced with 50%. 4Energy Invest has used its right to terminate the agreement on September 30, 2014, and all staff has been moved to the operational sites, as an element of the overhead cost reduction program. In the course of 2009, a lease for a Skoda car has been concluded for a period of 48 months with a monthly payment of EUR. The lease terminates on 28 January In the course of 2010, two car leases have been concluded with KBC Lease, both for a period of 48 months with monthly payments of respectively EUR and EUR. The leases terminate respectively on 7 October 2014 and 23 July End 2009, 4HamCogen signed a lease agreement (Recht van Opstal) with Coverco NV for a period of 35 years for the land needed to implement the cogeneration project in Ham. The yearly payment is set at 50 k EUR and is payable at each anniversary date of the signing Impairment The changed market conditions, new insights in the regulatory framework and enhanced comprehension of the side effects of operations (e.g. processing of ashes), resulted in revised business plans for all the installations. The WACC (weighted average cost of capital) used when discounting the future cash flows was set at 6.5%. This can be perceived as very low for a distressed investment, but reflects the fact '000 '000 '000 Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years 1,350 1,400 1,574 Total 1,715 1,853 2,209

31 that: (i) shareholder equity is close to zero, (ii) the financing cost with third party financing partners is estimated at 6.5%. If new financing were to be raised at this moment, this would come at a very high cost. IAS 36 states that the discount rate should only be adjusted for risks that are not yet included in the future cash flow estimates. In this model the risks are already included in the future cash flow estimates, and hence the discount rate should only take into account the time value of money. The asset values resulting from the discounted expected cash flows from the new business plans, are far lower than the accounting values of the assets. Therefore the Board has decided to adjust the net book values by recording an impairment of 22.2 million. This comes on top of the impairment recorded on Amel 3 per 30 June The total impairment amount recorded in 2012 can be broken down as follows: Impairment recorded per 30 June 2012 on the Amel 3 installation 2,0 M EUR Impairment recorded per 31 December 2012 (see detail below) 22,2 M EUR Impairment on other assets (mainly in the Anderlecht office) 0,2 M EUR The impairment of 22,2 million EUR that was decided upon, is allocated to the different installations as follows : Valuation of building & equipment Before impairment Impairment After impairment Amel I & II 27.2 Mio 6.3 Mio 20.9 Mio Ham 36.3 Mio 11.3 Mio 25.0 Mio Amel III (1) 9.0 Mio 4.5 Mio 4.4 Mio Total 72.5 Mio 22.2 Mio 50.4 Mio (1) The value before impairment is the value per 31/12/2012, and already includes the impairment recorded in the first semester and included in the figures per 30/06/

32 Financial income and costs '000 '000 '000 Bank interest income Interest income Interest capitalised into assets under construction Other financial income Financial income Bank interest expense -3,222-2,641-1,898 Interest paid to related parties Decrease in FV on financial instruments , Interest capitalised into assets under 0 1, construction Bank charges Financial costs -4,326-2,796-1,631 Net financial costs -4,318-2,789-1,605 Financial costs have increased, as no more interests were capitalized in 2012, since there are no more assets in construction (in ,1 million EUR in interests was capitalized, in ,8 million EUR) Taxation No taxation is due. The Board decided to fully impair the tax asset, which only represents a value when it can be offset against taxable profits within a reasonable period of time Intangible assets '000 '000 '000 Cost Balance at 1 January Acquisitions Transfer from assets under construction Disposals Balance at 31 December Depreciation Balance at 1 January Depreciation charge of the year Impairment Disposals Balance at 31 December Carrying amounts At 1 January At 31 December

33 The software developed for the BioCoal project has been fully impaired, as the development of this project was stopped Land and buildings Installations, machinery and equipment The guarantees and pledges on the land and buildings and installations, machinery and equipment of the Group are detailed in section The acquisitions mainly relate to the cogeneration installation in Ham '000 '000 '000 Cost Balance at 1 January 6,067 3,744 3,744 Acquisitions 15 2,323 0 Transfer from assets under construction Disposals Balance at 31 December 6,083 6,067 3,744 Depreciation Balance at 1 January -1, Depreciation charge of the year Disposals Balance at 31 December -1,618-1, Carrying amounts At 1 January 4,847 2,919 3,162 At 31 December 4,464 4,847 2, '000 '000 '000 Cost Balance at 1 January 69,676 34,830 34,828 Acquisitions 3, Transfer from one heading to another ,607 0 Disposals Balance at 31 December 73,482 69,676 34,831 Depreciation Balance at 1 January -9,910-7,028-4,618 Depreciation charge of the year -4,963-2,882-2,411 Impairment -17, Transfer from one heading to another -123 Disposals 0 0 Balance at 31 December -32,648-9,910-7,028 Carrying amounts At 1 January 59,766 27,802 30,210 At 31 December 40,834 59,766 27,802

34 The carrying balance is severely impacted by the impairments that were booked on all assets, as explained in section Furniture and vehicles '000 '000 '000 Cost Balance at 1 January Acquisitions Disposals Balance at 31 December Depreciation Balance at 1 January Depreciation charge of the year Disposals Balance at 31 December Carrying amounts At 1 January At 31 December Leasing and similar rights Finance leases relate to manufacturing equipment with lease terms of 5 years and longer. The Group has options to purchase the equipment for a nominal amount at the conclusion of the lease agreements. The Group s obligations under the finance leases are secured by the lessors title to the leased asset '000 '000 '000 Cost Balance at 1 January 1,087 1,205 1,186 Acquisitions Reversal government grants 632 Transfer from one heading to another 10, Disposals Balance at 31 December 12,553 1,087 1,204 Depreciation Balance at 1 January Depreciation charge of the year Impairment -6, Transfer from one heading to another 123 Disposals Balance at 31 December -7, Carrying amounts At 1 January At 31 December 5,

35 The transfer from assets under construction relates to the Amel 3 pellet production facility, that was taken in use in the beginning of Energy Invest was granted an investment grant from the Walloon Region for an amount of 1,264 k EUR in the framework of the capital expenditures program implemented for its Amel III BioCoal unit. This amount was deducted of the acquisition value of the installation. Only the first half of this amount has actually been received. The other half remained as a current receivable on the balance sheet. As it now is no longer certain that the second tranche of 632 k EUR will be received, this amount was added again to the acquisition value of the asset. The lease contract for the fuel handling installation comprises a total investment amount of 915 k EUR, with a residual value of 18 k EUR. The contract has a duration of 10 years and started on The lease contract for a trailer comprises a total investment amount of 16 k EUR, with a residual value of 1 k EUR. The contract expires on The lease contract for the Pellet production Unit (Amel III), Fuel Preparation Facilities and Related Equipment covers an investment amount of 8,980 k EUR with a residual value of 89,8 k EUR. The contract will terminate by In 2012, a lease contract was entered into for a bulldozer at the Ham site, for a total investment amount 191 k EUR, with a residual value of 6 k EUR. The contract runs until July Other tangible assets '000 '000 '000 Cost Balance at 1 January Acquisitions Disposals Balance at 31 December Depreciation Balance at 1 January Depreciation charge of the year Disposals Balance at 31 December Carrying amounts At 1 January At 31 December

36 Assets under construction There are no more assets under construction, as all projects now have operational status. No other commitments concerning the acquisition of assets were taken as of today Goodwill There is no more goodwill on the balance sheet. The goodwill recorded in the past on the Pontrilas Renewable Energy Limited (later renamed 4EI Limited) shares was impaired in EI Limited is currently in liquidation. There are no outstanding debts nor costs to which the Group could be exposed Deferred tax assets and liabilities '000 '000 '000 Cost Balance at 1 January 10,679 31,797 16,080 Acquisitions 0 19,238 17,422 Transfer to land & buildings Transfer to installations, machinery & equip. -10,679-36,930 0 Transfer to goodwill Impairment loss 0-3,425-1,706 Disposals Subsidies Balance at 31 December 0 10,679 31,797 Carrying amounts At 1 January 10,679 31,797 16,080 At 31 December 0 10,679 31,797 The group has a large accumulated fiscal loss carry over, for which a tax asset of 15,8 million EUR could be recorded. However, the Board decided not to record a tax asset, and moreover to fully reverse the existing tax asset, which only represents a value when it can be offset against taxable profits within a reasonable period of time '000 '000 '000 Tax losses carried forward 10,844 2,084 2,232 Investment deduction 4,196 3,933 3,225 Notional interest deduction Tax assets 15,790 6,559 6, Other non current assets Long term receivables relate to cash guarantees deposited. 36

37 Inventories '000 '000 '000 Raw materials and consumables White wood pellets (to be sold) Spare parts Total 934 1,014 1, Trade and other receivables '000 '000 '000 Trade receivables 3,417 3,394 1,242 Receivables due from related parties Tax receivables-vat Insurance claims Deferred expenses Subsidies Other receivables Total 3,580 4,493 2,757 The outstanding trade receivables relate to outstanding invoices and invoices to be issued for green certificates and electricity produced. There are no amounts significantly overdue. All amounts related to 2012 have been received at the date of this report '000 '000 '000 Not due 3,308 2, Less than 30 days overdue days overdue days overdue days overdue More than 120 days overdue Total ,242 The second half of the subsidy (632 k EUR) related to Amel III that still is to be received has been reversed, as it is no longer 100% certain that it will be received, due to time constraints Cash and cash equivalents The Group s cash and cash equivalents comprise cash deposits held at Belgian banks. 37

38 Share capital Date Action Shareholder Shares Price per share (Fractional Value) 28-Sep-05 Incorporation Enerpro SPRL controlled by Yves Crits Sep-05 Incorporation Nico Terry Sep-05 Incorporation Guido Schockaert Sep-05 Incorporation KBC Private Equity NV Nov-05 Capital increase through contribution in kind of Renogen shares Enerpro SPRL 21, Nov-05 Capital increase through contribution in kind of Renogen shares Nico Terry 21, Nov-05 Capital increase through contribution in kind of Renogen shares Guido Schockaert 21, Jan-06 Capital increase through contribution in cash KBC Private Equity NV 34, Capital decrease with repayment to the 19-Jan-06 Founders of their initial contribution in N/A cash at incorporation (aggregate amount of N/A ,200) 21-May-08 Share split by 90 Existing shareholders 9,000, Jun-08 Capital increase IPO 3,520, Number of shares 12,520, Interest-bearing loans and borrowings '000 '000 '000 Non current Loans from related party KBCpe Bank loans 19,635 40,620 26,173 Leasing debts 8,630 9,052 8,813 Other loans 0 4,661 2,857 Total non current loans and borrowings 28,265 54,333 37,843 Current Bank loans 29,738 5,179 3,679 Leasing debts 1, Other loans 5, Total current loans and borrowings 36,318 5,717 4,610 Total 64,583 60,050 42,453 As 4HamCogen is in breach of its credit agreements and no final agreement has been reached on their restructuring, all amounts are in principle immediately reimbursable by the end of the standstill on 30 August Therefore all debt related to the Ham installation is now to be considered current. This explains the shift from non-current to current liabilities. 38

39 Interest rate Outstanding Movenements in 2012 Outstanding end 2012 Final repayend 2011 Reimbursed Added < 1 year > 1 year Total ment date Amel I (Renogen) KBC Roll-over credit ( ) Euribor 3m. + 2,5% 11, , ,895 11,763 30/12/2022 Amel II (Renogen) KBC Roll-over credit ( ) Euribor 3m. + 2,5% 8, ,794 30/12/2022 Amel III (Renogen) KBC Roll-over credit ( ) Euribor 3m. + 2,5% /12/2022 Lease remorque (Renogen) Euribor 3m. + 2% /03/2015 KBC Lease ( ) Euribor 3m. + 2,5% 8, ,980 30/06/2022 Ham (4HamCogen) ING-KBC syndicated loan facility Euribor 6m. +2,5% - 3,25% 23, ,425 26, ,410 31/12/2021 ING Lease bulldozer 1,45% /10/2016 LRM subordinated loan facility 8% 4, after first withdrawal Other Straight loan Renogen Euribor 3m. + 1,5% Cash credit Renogen Euribor 1m. + 1,25% Straight loan 4HamCogen Cash credit 4HamCogen Cash credit Amel Bio EONIA + 2% Lease facility fuel handling (Amel Bio) 5.84% /11/2017 Accrued interest expenses Total 59,864 2,056 6,204 36,316 28,266 64,582 Over the year financial debts increased with 4,5 million EUR. This is the result of: reimbursements of 2,1 million EUR; new debts of 6,1 million EUR; increase in accumulated interests payable to financial institutions with 0,4 million EUR (from 0,2 million per 31/12/2011 to 0,6 million EUR per 31/12/2012). According to the financing agreement with KBC for Renogen, a reimbursement was to take place in March The Group could not honour this obligation and a standstill period has been granted until August 30, Securities In order to secure the obligations under the roll-over credits with KBC Bank, Renogen SA had created: - a mortgage of 1.846k EUR in principal on the cogeneration plant in first rank, located at the Kaiserbaracke industrial area in Amel, belonging to Renogen SA on November 18, 2005; - a pledge of the business in the amount of 250k EUR in principal (including receivables and 50% of stocks) in first rank on the business located at the Kaiserbaracke industrial area in Amel, belonging to Renogen SA, established on November 18, 2005; - the power of attorney to create a mortgage of k EUR in principal on the cogeneration plant, located at the Kaiserbaracke industrial area in Amel, belonging to Renogen SA, granted on November 18, 2005, together with a prohibition against alienating or mortgaging the real property or granting power of attorney to that end with the exception of the above mentioned mortgage of 1.846k EUR in favor of the bank. - the power of attorney to establish a pledge of the business in the amount of k EUR in principal (including receivables and 50% of stocks) on the business located at the Kaiserbaracke industrial area in Amel, belonging to Renogen SA granted on November 18, 2005, together with prohibition against alienating or pledging the business or 39

40 granting power of attorney to that end with the exception of the above mentioned pledge of the business in the amount of 250k EUR in principal in favor of the bank. - The power of attorney to create a mortgage and the power of attorney to establish a pledge of the business may be realized together for an amount of k EUR in principal. - an acceptable property insurance policy relating to the cogeneration plant with the bank as direct beneficiary. In consequence, the bank will at all times be entitled to pay the insurance premium instead of the policyholder. In such case, the insurance premiums and expenses paid by KBC bank will be recovered from the borrowers. KBC bank will be entitled to take all initiatives vis-à-vis the insurers to protect its rights in general as lender, including requiring of the insurers that : o o all damages will be paid to or through the intermediary of KBC bank; the insurance cover may not be suspended, reduced, annulled, cancelled or in any other way terminated without the bank being given advance notice thereof. - the power of attorney (mandate) to create a mortgage in the amount of 11,400k EUR in principal, on an industrial building located at 4770 Amel, Gewerbezone Kaiserbaracke, belonging to Renogen SA granted on April 13, 2007, together with a prohibition against alienating or mortgaging the real property or granting power of attorney to that end. - the power of attorney (mandate) to establish a pledge of the business (floating charge) in the amount of 11,400k EUR in principal, on the business at 1420 Braine-L alleud, Chaussée d Ophain 181 and 4770 Amel, Gewerbezone Kaiserbaracke, granted on March 9, 2007, together with a prohibition against alienating or pledging the business or granting power of attorney to that end. - The power of attorney to create a mortgage and the power of attorney to create a pledge of the business may be realized together for an amount of k EUR in principal. - the pledge from Renogen SA of all present and future cash into the following Debt Service Reserve Account: and a mortgage in the amount of 50k EUR in principal: a first mortgage on the acquired plot of land and a second mortgage on the cogeneration plant, both located at 4770 Amel, Kaiserbaracke, belonging to Renogen SA established on a power of attorney (mandate) to create a mortgage in the amount of 400k EUR in principal: on the acquired plot of land and on the cogeneration plant, both located at 4770 Amel, Kaiserbaracke, belonging to Renogen SA established on This property must be free and unencumbered, with the exception of the above mentioned registered charges. - a power of attorney (mandate) to create a mortgage in the amount of 370k EUR in principal: on the acquired plot of land and on 2 cogeneration units and the torrefaction unit located at 4770 Amel, Kaiserbaracke, belonging to Renogen SA established on This property must be free and unencumbered, with the exception of the above mentioned registered charges. - a power of attorney (mandate) to establish a pledge of the business (floating charge) in the amount of 370k EUR in principal, on the business at 1420 Braine-L alleud, Chaussée d Ophain 181 and 4770 Amel, Gewerbezone Kaiserbaracke, granted on , together with a prohibition against alienating or pledging the business or granting power of attorney to that end. 40

41 - The power of attorney to create a mortgage and the power of attorney to create a pledge of the business may be realized together for an amount of 370k EUR in principal. - a power of attorney (mandate) to create a mortgage in the amount of k EUR in principal on a plot of land and on 2 cogeneration units and the torrefaction unit located at 4770 Amel, Kaiserbaracke, belonging to Renogen SA established on (for a detailed description: see the assets as described in the power of attorney ad 370 k EUR, established on article 4, sub 11). These properties must be free and unencumbered, with the exception of any and all charges registered in favor of the bank. - the pledge of a claim (claims) granted by DIRECTION GENERALE OPERATIONNELLE DE L ECONOMIE, DE L EMPLOI ET DE LA RECHERCHE on the borrowings arising from Demande de prime à l investissement established on A pledge granted by 4Energy Invest NV of 714 shares Renogen - A pledge granted by Enerpro SPRL of 1 share Renogen (note: this share has now been transferred to 4Energy Invest) A new credit agreement was signed on October , by which the following additional securities were granted: - A second and third mortgage in the amount of 22,4 million EUR on all immovable assets (except the torrefaction unit, owned by KBC Lease) located at the Amel site; - A second rank pledge of the business (including receivables and 50% of the stock) in the amount of 22,4 million EUR located at the Amel site. - The pledge from the borrowers of all cash into the Maintenance Reserve Account, which will be funded one a year for an amount of 213 k EUR. In return, the following securities were released: - the power of attorney to create a mortgage of k EUR in principal on the cogeneration plant, located at the Kaiserbaracke industrial area in Amel, belonging to Renogen SA, granted on November 18, the pledge from Renogen SA of all present and future cash into the following Debt Service Reserve Account - a partial release of 6 M EUR of the power of attorney (mandate) to create a mortgage in the amount of 11,400k EUR in principal, on an industrial building located at 4770 Amel, Gewerbezone Kaiserbaracke, belonging to Renogen SA granted on April 13, 2007, and of the power of attorney (mandate) to establish a pledge of the business (floating charge) in the amount of 11,400k EUR in principal, on the business at 1420 Braine-L alleud, Chaussée d Ophain 181 and 4770 Amel, Gewerbezone Kaiserbaracke, granted on March 9, The following has been agreed for all Renogen s commitments towards the bank: if these covenants are not complied with, the bank may after informing the borrowers accordingly in writing increase all rates applying to the credit and its various forms of utilization. This does not prejudice what is stipulated in the General Credit Terms and Conditions regarding suspension and termination of the forms of credit and of the credit facility - The Debt service ratio (EBITDA / debt service) has to be at least 1 from on. - The borrowers will not pay any dividends or pay back subordinated debt without agreement from KBC Bank. - No amendments can be made to the PPA and the CPA without the consent of the bank. 41

42 - Every six months management accounts and a balance sheet have to be submitted within 45 days after the preceding six months. A yearly report, approved by the board of directors, has to be submitted within six months after the closing of the accounts. - All payments must be done through KBC accounts. - Renogen SA undertakes not to alienate, mortgage or pledge their assets, or establish a lien thereon or grant a power of attorney to this end without the bank s prior consent in writing. - Renogen should take out insurance against fire with regard to their movable and immovable property on Amel I, II and III and their liability against third parties in the neighborhood. - The transfer orders submitted to the bank in favour of the borrower s accounts maintained at other banks, will be entered on the borrower s accounts at KBC Bank. - Interest rate on the subordinated loans provided by 4Energy Invest to Renogen may not exceed 5%. - The payment of management fees to 4Energy Invest by Renogen is restricted to 360 keur per year. - The tangible net worth ratio must at all times be positive. - The borrowers will prepay the roll-over credit as follows: o With 500 k EUR upon receipt of the prime d investissement from the Direction Générale Opérationelle de l Economie, de l Emploi et de la Recherche o Yearly and in function of the EBITDA : o EBITDA < 3,8 M EUR: no prepayment EBITDA between 3,8 M and 4,3 M EUR: 100% of free cash flow EBITDA > 4,3 M EUR: 50% of free cash flow Voluntary prepayments on a best effort basis In order to secure the obligations under the syndicated credit facility with the consortium ING België - KBC Bank for the cogeneration project in Ham, 4Ham Cogen and 4Energy Invest have created; - a mortgage of 1,000 k EUR in principal on the Recht van Opstal and all buildings, installations, constructions and goods to be established by 4HamCogen on that land, located at the Kwaadmechelen industrial area in Ham, belonging to 4HamCogen since December 18, 2009; - the power of attorney to create a mortgage of 28,200 k EUR in principal on the Recht van Opstal and all buildings, installations and goods to be established by 4HamCogen on that land, located at the Kwaadmechelen industrial area in Ham, belonging to 4HamCogen since December 18, 2009, together with a prohibition against alienating or mortgaging the real property or granting power of attorney to that end with the exception of the above mentioned mortgage of 1,000 k EUR in favour of the banks. This power of attorney was converted into a mortgage for 19 million EUR in March a share pledge agreement between 4 Energy Invest and Renogen (one share) as pledgors and ING Belgium as pledgee and representative of the lenders in respect of all shares of 4 HamCogen, other equity interests and all present and future rights attaching to, and all 42

43 monies payable in respect of, or derived from, the pledgors shares and other equity interests; - a receivables pledge agreement between 4 HamCogen as pledgor and ING Belgium as security agent and representative of the security beneficiaries and as creditor of the senior parallel debt by which the pledgor pledges to the security agent and the security beneficiaries any and all claims, rights, receivables and obligations (whether present, future, actual or contingent) of the pledgor in connection with accounts receivable, insurances, hedging agreements, project agreements and trade receivables; - a green certificates pledge agreement between 4 HamCogen as pledgor and ING Belgium as security agent and representative of the security beneficiaries by which the pledgor pledges to the security agent and the security beneficiariesa first right on all green certificates that the pledgor owns from time to time and all rights en receivables that the pledgor would have from time to time in relation to those green certificates and in general all revenues and income that relate to it; - a project documents pledge agreement between 4 HamCogen as pledgor and ING Belgium and the other Finance Parties as pledgees in respect of the Project Documents The following has been agreed for all of 4Ham Cogen commitments towards the bank consortium ING België - KBC bank: - The Historical Senior Annual Debt Service Coverage Ratio on each Covenant Testing Date shall not be less than 1.20 : 1; whereby the Senior ADSCR means: (a) EBITDA for the Relevant Period ending on that date; to (b) Senior Debt Service for the Relevant Period ending on that date. - The Projected Senior Annual Debt Service Coverage Ratio on each Covenant Testing Date shall not be less than 1.20 whereby the "Projected Senior Debt Service" means: Senior Debt Service for the relevant calculation period, whereby EURIBOR for each future Interest Period shall be assumed to be the interest swap rate applicable under the Hedging Agreements. - The Loan Life Coverage Ratio on each Covenant Testing Date shall not be less than 1.25; Those coverage ratios have to be confirmed by 4HamCogen through a compliance certificate to be signed by two directors of 4HamCogen with each set of its audited annual financial statements and half-yearly financial statements. - Prior to financial closing, 4Energy Invest will fund 4HamCogen with 2,825 k EUR share capital. - Prior to financial closing, 4Energy Invest will make available to 4HamCogen a subordinated debt facility of 3,475 k EUR that will be used by 4HamCogen prior to any drawdown under the credit facilities made available by the lenders ING and KBC and that can not been repaid before final repayment under the credit facilities has occurred. - 4Energy Invest will fully fund all cost overruns in relation to the cogeneration project in Ham by way of equity and/or subordinated debt. - 4Energy Invest shall procure that neither Nico Terry BVBA nor ENERPRO SPRL ceases to perform its duties as manager or director of 4HamCogen (other than by reason of death, retirement at normal retiring age or through ill health of the relevant representative, or by reason of gross negligence; - 4Energy Invest shall ensure that no change of control occurs over 4HamCogen. - 4Energy Invest shall not (and will ensure that 4HamCogen shall not) abandon all or a material part of the cogeneration project in Ham. - 4Energy Invest shall not (and will ensure that 4HamCogen shall not) rescind or purport to rescind or repudiate or purport to repudiate a finance document or any of the transaction security or evidence an intention to rescind or repudiate a finance document or nay transaction security; 43

44 - 4Energy Invest shall procure to the lenders within 120 days after the end of each financial year and within 90 days after the end of each half year its respective financial statements; - 4Energy Invest has agreed to a yearly price stabilization mechanism whereby it agreed to pay an amount to 4HamCogen equal to the lessor of (i) an amount in EUR equal to (46 average realized electricity price (EUR/MWh) by 4HamCogen) x the actual electricity production of 4Ham Cogen and (ii) EUR 750 k EUR. Under the price stabilization mechanism it was agreed that 4Energy Invest can invoice to 4HamCogen for an amount equal to the lessor of (i) an amount in EUR equal to (average realized electricity price (EUR/MWh) 65 by 4HamCogen) x the actual electricity production of 4HamCogen and (ii) EUR 750 k EUR. The price stabilization mechanism has to be structured under either a cash collateral account or a standby letter of credit to be established by Project Completion Date. - 4HamCogen has broad information undertakings under the finance documents with respect to financial statements, project budgets, financial models, Computer model, reports by Quantity Surveyor - 4HamCogen will prepay yearly the outstanding credit facilities with a mandatory prepayment equal to 50% of the excess cash flow not exceeding 1,000 k EUR and 25% of the excess cash flow exceeding 1,000 k EUR. - 4HamCogen has to establish a set of reserve accounts o As of each DSRA calculation date falling 24 months after the Project Completion Date, a DSRA equal to the next 6 months debt service has to be in place; o A Contingency Maintenance Reserve Account up to 150 k EUR has to be in place twelve months after the Project Completion Date; o A Scheduled Maintenance Reserve Account has to be gradually built up to 600 k EUR over the cycle of the maintenance period (5 years); The following has been agreed for all of 4HamCogen commitments towards LRM: - 4Energy Invest will act as co-debtor with respect to all commitments undertaken by 4HamCogen towards LRM. 4Energy Invest will therefore, together with 4HamCogen, be responsible for the payment of all amounts due by 4HamCogen under its credit agreement with LRM. - 4Energy Invest will use its voting rights to have a representative of LRM appointed as director of 4HamCogen Trade and other payables '000 '000 '000 Trade payables 2,961 3,563 3,070 Accrued expenses 3,609 3,181 1,600 Total non current loans and borrowings 6,570 6,744 4,670 44

45 Financial instruments Exposure to credit, interest rate and currency risks arises in the normal course of the Group s business but is considered limited. Credit risk The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed for all customers requiring credit over a certain amount. The Group does not require collateral in respect of financial assets. At the balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset. The Group s main clients are financially robust companies, and payment terms are very short (14 to 30 days). Therefore the risk is limited. Foreign currency risk The Group is no longer exposed to foreign currency risk as its development activities abroad have been stopped and all transactions are now in Euro. Interest Rate Swaps The Group contracted all of its financial debt in EUR at a floating rate. The financial instruments (interest rate swaps) do not meet the conditions for hedge accounting and are accounted for at fair value with changes in fair value recognized immediately as a component of net profit. 4Energy Invest has concluded the following Interest Rate Swaps: Installation Interest rate Date of swap Notional amount Hedged Fair value contract signature hedged until 12/31/2012 (in euro) (in euro) Amel I % 8/20/2007 8,146,000 8/18/ ,489 Amel II % 9/30/2009 3,847,500 7/26/ ,912 Amel III % 9/30/2009 4,022,741 9/28/ ,722 Ham % 3/19/2010 6,184,500 6/29/ ,911 Ham % 3/19/ ,765,500 6/29/2018-1,366, Provisions Provisions were recorded for: 35,966,241-2,917,251 The rent to be paid until 30 September 2014 as contractually agreed for the Anderlecht offices that are no longer used (99 k EUR); A dispute on invoices related to infrastructure works on the Ham site (140 k EUR). 45

46 Estimated disbursement Total Rent Anderlecht office: 01/01/2013 until 30/9/ Dispute infrastructure works Ham Personnel The average number of employees and remuneration paid for the years ended December 31, 2012, December 31, 2011 and December 31, 2010 are as follows: Commitments The Group has no commitments other than those included in the report Related parties Identification of related parties '000 '000 '000 Average number of employees Wages and salaries Social security and health ins. exp Other social expenses Total 1, The Group has a related party relationship with its executive directors Enerpro SPRL, Nico Terry BVBA, ContinuousInsight2Impact BVBA and Nadece BVBA, and with its non-executive directors Enermoza BVBA and VEM BVBA. According to the last notified transparency declaration, KBC Private Equity NV no longer holds an interest in the share capital of 4Energy Invest NV. According to the last notified transparency declaration, Enerpro SPRL, Nico Terry (permanent representative of Nico Terry BVBA), Guido Schockaert (permanent representative of Enermoza BVBA) and Philiep Van Eeckhout own share capital of 4Energy Invest NV as indicated in the table below: Party Shares Vested warrants Total voting securities Unvested warrants Date transparency declaration Number Number Number % Number Nico Terry 28 October ,090, ,000 2,090, % 0 Enerpro SPRL Yves Crits 7 January ,843, ,000 1,843, % 0 Philiep Van Eeckhout 18 October ,400, ,400, % 0 Guido Schockaert 18 October , , % 0 Free Float 6,790, ,012 6,790, % 0 Total 12,520, ,012 10,429,235 83% 0 46

47 Related parties '000 '000 '000 Remuneration and benefits paid to key management (a) short term employee benefits (b) post-employment benefits (c) other long-term benefits (d) termination benefits (e) share based payment (stock options) Total The Extraordinary General Shareholders Meeting of May 21, 2008 decided to issue up to 900,009 warrants under the Energy Invest Stock Option Plan. The warrants have been subscribed by 4Energy Invest with a view to allocating them to executive management, employees and consultants of 4Energy Invest. As of end 2008, 716,995 warrants had been offered and accepted by executive management, employees and consultants of 4Energy Invest as follows: Enerpro sprl: 270,000, Nico Terry bvba: 162,000, Enermoza bvba: 162,000, other 122,995. In December 2009, the Limburgse Reconversie Maatschappij had been offered and accepted 183,014 warrants (with an exercise price of 6.25 EUR/Share) in the framework of their directors mandate of 4HamCogen. As a result, all issued 900,009 warrants have been granted as of end The shareholding structure above gives an overview of the status of the warrants (vested/unvested) as of the date of publication of this annual report The detailed disclosures related to the Corporate Governance Statement are included in the Corporate Governance Chapter of the Board report on the statutory financial statements over the year The stock options are recognized at fair value at the date of grant. The fair value determined at the grant date of the stock options is expensed, with a corresponding increase in equity, on a straight-line basis over the vesting period, based on the Group s estimate of the stock options that will eventually vest and adjusted for the effect of non-market-based vesting conditions. The fair value of the stock options at grant date (July 31, 2008) amounted to 981 k EUR. The fair value of the stock options granted to LRM amounted to 133 k EUR. The fair values have been adjusted end of 2011 to 896 k EUR, respectively 133 k EUR taking into account the actual and probable number of warrants forfeited. The fair value of the stock options was determined using the Black-Scholes model. The inputs in the model were in 2008: share price at grant date (5.7 EUR), exercise price (6.25 EUR), expected volatility of 23.9%, expected dividend yield of 0%, expected life time of the option of 5 years and a risk-free interest rate of 4.52%. 47

48 The inputs for the valuation of the warrants granted to LRM are as follows: share price at grant date (4.77 EUR), exercise price (6.25 EUR), expected volatility of %, expected dividend yield of 0%, expected life time of the option of 3.37 years and a risk-free interest rate of 1.90 %. The expensed cost for 2012 amounts to 14k EUR, this represents the final charge to the result for to the stock options. Transactions with related parties '000 '000 '000 Executive management Enerpro SPRL Trade & other payables by the Group Management fees/costs paid by the Group Nico Terry BVBA Trade & other payables by the Group Management fees/costs paid by the Group Enermoza BVBA Trade & other payables by the Group Management fees/costs paid by the Group ContinuousInsight2Impact BVBA Trade & other payables by the Group Management fees/costs paid by the Group Nadece BVBA Trade & other payables by the Group Management fees/costs paid by the Group (1) The trade payables balances relate to the unpaid part of the invoices for fees and expenses invoiced to the Group. The terms and conditions for the services rendered by Enerpro SPRL, Nico Terry BVBA and Enermoza BVBA are at arm s length and as such in accordance with normal terms of trade applicable in the market for this type of services or delivery of goods. The outstanding balances are payable or to be received on their respective maturity dates in cash. In respect of the transactions made with these parties, no guarantees were granted Major subsequent events The following events that took place in 2013 have a significant impact on the Group: 1. A commercial settlement was reached with EON Benelux A commercial settlement was reached with EON Benelux on the interpretation of the respective contractual rights and obligations as included in the off-take contract for electricity and green certificates for the Ham project. 2. Lowered expectations for 2013 The lower forecasts for electricity prices, the increased operating costs (among others due to environmental and technical requirements) and the lower than expected benefits for cogeneration in Ham, lowered the financial plan for 2013 and the years thereafter. Consequently the debt reimbursement schedules needed to be revisited. 3. Cogeneration benefits for the Ham project lower and less likely 48

49 4Energy Invest has ongoing consultations with the VREG about the cogeneration algorithm for the Ham Cogeneration project. The heat off-take and the sale of related cogeneration certificates (WKK) are known to be critical for the economics of the Ham cogeneration project going forward. The algorithm that is currently on the table poses 2 problems: Under the new system of Qualitative WKK a minimum cogeneration volume has to be achieved before WKK certificates can be obtained. This threshold is set so high, that the probability of realizing this in the coming years has become very low. Even when the cogeneration status is achieved, the number of WKK certificates that will be realized under the new system of Qualitative WKK is much lower than expected and does not compensate for the loss of green certificates (GSC). This seriously impairs the economic viability of the Ham-project, if the other variables (electricity and GSC prices) remain low. 4. Debt restructuring agreement of 21st December 2012 aborted and new standstill agreed upon In view of the group's current and expected financial and operational condition and prospects, impacted by the evolutions described above, Renogen and 4HamCogen will not be able to meet their debt repayment obligations as they are currently structured and would be amended by the agreement of 21 December Therefore 4Energy Invest needed to abort its plans to raise new capital as described in the press release of 21 st of December ING, KBC and LRM have agreed to a standstill on scheduled principal repayments of the group until August 30, In the coming months, 4Energy Invest intends to try and further restructure its debt at the level of both its subsidiaries. If the group does not succeed in bringing its financial obligations in line with its debt service capacity before the expiry of the standstill, on August 30, 2013 at the latest, it will be confronted with significant liquidity problems and with a risk of discontinuity in both its subsidiaries Earnings per share '000 '000 '000 Result of the period -37,392-4,249-1,095 Weighted average number of shares 12,520,090 12,520,090 12,520,090 Weighted average number of warrants issued 647, , ,284 Earnings/share Diluted earnings/share

50 The number of outstanding shares did not change over the last 3 years. Taking into account the actual number of warrants forfeited, the weighted average number of warrants issued over 2012 equals Considering the fact that the warrants were not in-the-money since 2009, they are not taken into account in the calculation of the diluted earnings per share in accordance with IAS

51 2. STATUTORY AUDITOR S REPORT TO THE GENERAL MEETING OF SHAREHOLDERS OF 4ENERGY INVEST NV, BOULEVARD PAEPSEM 20, 1070 ANDERLECHT, ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 (RPR BRUSSEL VAT BE ) In accordance with the legal requirements, we report to you on the performance of our mandate of auditor. This report includes our report on the consolidated financial statements for the year ended December 31, 2012, as defined below, as well as our report on other legal and regulatory requirements. REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS DISCLAIMER OF OPINION We have audited the consolidated financial statements of 4Energy Invest and its subsidiaries, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium. These consolidated financial statements comprise the consolidated statement of financial position as at December 31, 2012 and the consolidated income statement and consolidated statement of comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. The total of the consolidated statement of financial position amounts to ,43 EUR and the consolidated income statement shows a loss for the year of ,33 EUR. Board of directors responsibility for the preparation of the consolidated financial statements The board of directors is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines, is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Statutory auditor s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and 51

52 perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the statutory auditor s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the statutory auditor considers internal control relevant to the group s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the board of directors, as well as evaluating the overall presentation of the consolidated financial statements. We have obtained from the company and group s officials and board of directors the explanations and information necessary for performing our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our disclaimer of opinion on the consolidated financial statements. Disclaimer of opinion We refer to the uncertainties described in the annual report concerning the obtaining of a further restructuring of the existing credit facilities at both Renogen and 4HamCogen level and the need to strengthen the capital structure of 4Energy Invest. If no satisfactory restructuring of the existing credit facilities will be achieved, or if no additional funds will be found, the going concern of the group can no longer be guaranteed. In case the group will not be able to continue as a going concern, additional impairments and corrections may be required. Taking into account the considerable uncertainties with respect to the group s going concern described above, we are unable to express an opinion whether the consolidated Financial statements give a true and fair view of the group s financial position as of 31 December 2012, and of its results and its cash flow statement for the year then ended, in accordance with International Financial Reporting Standards as adopted by the EU and with the legal and regulatory requirements applicable in Belgium. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS The board of directors is responsible for the preparation and the content of the annual report on the consolidated financial statements. In the framework of our mandate our responsibility is, in all material aspects, to report our findings with respect to certain legal and regulatory requirements. On this basis, we provide 52

53 the following additional comment which does not modify our opinion on the consolidated financial statements: The annual report on the consolidated financial statements includes the information required by law, is consistent, in all material aspects, with the consolidated financial statements, and does not present any material inconsistencies with the information that we became aware of during the performance of our mandate. Zele, April 22, 2013 VGD Bedrijfsrevisoren Burg. CVBA Represented by Jurgen Lelie Spinnerijstraat ZELE 53

54 3. REPORT OF THE BOARD OF DIRECTORS ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED ON 31 DECEMBER 2012 IN ACCORDANCE WITH ARTICLE 119 OF THE BELGIAN COMPANY CODE 2 The following report has been established pursuant to article 119 of the Belgian Company Code by the Board of Directors on April 19, 2013 for submission to the annual general shareholders meeting of May 23, The information provided in this report is regulated information in accordance with article 36 of the Royal Decree of 14 November Dear Shareholder, We are pleased to present to you the consolidated financial statements for the year ended December 31, Overview of activities during the year has been a year with significant changes for 4EnergyInvest: Two additional projects have been launched into commercial operation. With no more projects under development (for the time being), the group is now fully focusing on its operations. This shift in strategy resulted in: o Enhanced insights in the operational parameters and challenges of wood biomass fired cogeneration plants; o Altering needs with respect to the group s leadership and management this resulted in changes both at management and director level; o A different cost structure and business model. Operations generated disappointing results. Combined with updated information on market evolutions (mainly with respect to electricity) and the specific regulatory framework, all this caused a drastic change to the business plans for the respective installations. This resulted in a review of the financing structure of the group. Two projects launched into commercial operation in 2012 The Ham cogeneration project has been in pre-commercial operation as of November 2011 and was definitely taken over from the contractor that designed and built the installation in April From then on, the installation is commercially operated by 4EnergyInvest. 2 All amounts in this section refer to IFRS consolidated figures. 54

55 Considering that no strategic partner could be found to provide the additional financing needed for the Bio-Coal project, the Amel 3 installation (that was initially designed to produce Bio-Coal) has been converted into a white wood pellet production facility. It became operational in the first half of This means that at the end of 2012 the group operates the following assets: Amel I cogeneration project ( Amel I ): in operation since November 2007 (operated within the affiliates Renogen/Amel Bio); Amel II cogeneration project ( Amel II ): in operation since May 2008 (operated within the affiliates Renogen/Amel Bio); Amel III white wood pellets production project ( Amel III ): in operation as from the first semester of 2012 (operated within the affiliates Renogen/Amel Bio) ; Ham cogeneration project ( Ham ): in pre-commercial operation as from November 2011, in commercial operation as from April 2012 (operated within the affiliate 4HamCogen); Enhanced insights in operational parameters and challenges Operating wood biomass fired cogeneration plants requires intensive management attention. Each new installation has a learning curve to incur and many operational parameters have to be fine-tuned. The type of biomass that is consumed has a critical impact on the operations. In 2012 this continuous learning process was relevant for all the installations, but in particular for the Ham (fluidized bed technology) and Amel 3 (white wood pellet production) installation. We had to cope with the fine-tuning of many parameters, oa. higher than expected ash-content of the biomass, water and sand consumption, pre-treatment of the biomass, the fine-tuning of the boiler, etc. Operational and strategic leadership and management aligned with the changed activities Running an operational company (as opposed to developing new projects) requires very different skills at operational, managerial and leadership level. This resulted in changes in the composition of the management team and the Board. In this respect further optimizations will be made in Cost structure and business model have been revisited The shift to a fully focused operational business model, resulted in changes to the cost structure, where especially the non-operational costs have been cut, e.g. the Anderlecht headquarter office has been reduced to a minimum, and all staff has been moved to the operational sites. 55

56 Operating results were disappointing The installations faced some unexpected outages (due to technical breakdowns) and combined with low electricity prices and higher operating costs (amongst others due to the decreased quality of biomass), this implied less cash flow generation. Updated information on the markets for electricity and the regulatory framework for renewable energy 2012 was a revealing year for the electricity market as the prices remained low. The electricity shortages that were announced during Summer did not occur due to the continued high imports from surrounding countries. Over Christmas, the electricity price was even slightly negative. As the revenues generated by 4EnergyInvest depend on the market prices, this resulted in a drop in revenues. Moreover, the market does not show signs of picking up in the coming years, although it is impossible to make accurate forecasts in this respect. Secondly, the ongoing discussions with the VREG in 2012 revealed that the potential benefits to be obtained from cogeneration for the Ham project are uncertain. Revision of the financing structure As several of the developments mentioned above had an immediate negative impact on the (expected) cash flow generation and the overall economics of the assets, the group decided to revisit its financing structure, to avoid liquidity problems. At the level of Renogen/Amelbio (the entities that operate the Amel 1, 2 & 3 projects) a debt restructuring was agreed upon with KBC in October On December 21 st an agreement in principle was reached with LRM and the bank consortium ING/KBC, the financial partners of 4HamCogen. This restructuring plan also included a share capital increase with preferential subscription rights for the existing shareholders. The agreement was subject to evolution of the financial and operational performance of the group in the subsequent months. 56

57 3.2 Risks and uncertainties The company continues to be exposed to the general risks as mentioned in the registration document of 30 April The key uncertainties the Group is confronted with at this point in time, are: Evolution of electricity prices; Regulatory framework with respect to renewable energy; Outcome of the ongoing discussions with the banks and LRM about debt restructuring. This item is particularly important, as the Group s continuity depends on it. More information on these items can be found in items 3.4, 3.5 and

58 3.3 Comments on the consolidated financial statements The consolidated financial statements reflect the following group structure as of 31 December 2012: The consolidated financial statements reflect the following status of the different investment projects pursued by 4Energy Invest as of 31 December 2012: In operation Amel I cogeneration project ( Amel I ): in operation since November 2007 (operated within the affiliates Renogen/Amel Bio); Amel II cogeneration project ( Amel II ): in operation since May 2008 (operated within the affiliates Renogen/Amel Bio); Ham cogeneration project ( Ham ): in pre-commercial operation as from November 2011 (in this phase operations and maintenance remained the responsibility of the contractor that built the installation); in commercial operation as of April 2012 (from this date onwards operations and maintenance became the responsibility of 4HamCogen) (operated within the affiliate 4HamCogen); Amel III white wood pellets production project ( Amel III ): in operation as from the first semester of 2012 (operated within the affiliates Renogen/Amel Bio). Under construction/development There are currently no more projects under construction or development. 58